Real estate prices are still showing signs of cooling off, so now may be a good time to think about getting into the market so you can get ahead financially.
But it might be good to review some market trends before you start looking for a new place or wonder how much your house could be listed for if you have decided to sell.
Here are a few trends to keep an eye on if you’re thinking of diving into the real estate market this year.
1. Homes are staying on the market longer
It was tough to find a home during red-hot runs on real estate in 2022. In fact, the median days on the market hit a low of just 17 days in May of 2022.
But that number is going up, reaching 52 median days on the market in January of 2023. That mark was 24 days higher than in January 2022.
This change could be good news for potential buyers, who may not have as much pressure to quickly buy a home before someone else gets it with a higher bid.
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2. Home prices are coming down
You may have been spooked from getting into the housing market due to stiff competition with other potential offers from highly competitive buyers.
The good news is that prices are coming down, which might help you if you’re a buyer. The median sales price for a home in the US was $383,001 in January 2023, reflecting a downward trend in the market after the peak last May.
But year-over-year, that price is still 1.4% higher than in January 2022, so there may be more room to slide.
3. Houses are selling below the list price
Another factor that could work in a buyer’s favor is that more homes are selling below their list price, which can help you keep more money in your pocket.
In January, only 21.2% of homes sold above their list prices compared to 59.1% selling above their list prices in May.
In fact, there were stories of multiple offers above the list price for homes in some cases last year, but that trend may be fizzling.
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4. Inventory is still tight
One of the issues that were causing pressure on the market was the drop in the number of homes listed.
The number of newly listed homes in January 2023 was 376,419 homes in the US, which is down 17.2% compared to a year earlier.
Inventory is staying on the market longer and that could help buyers. But the lack of inventory and options available may work in sellers’ favour.
5. The Sun Belt is sunny
The sun belt continues to be an area where people desire to move as more companies have relocated to places like Texas. You may still pay a premium in some of these locations.
Places like Phoenix and Las Vegas are still being sought after by potential buyers as more workers are retiring or moving to more affordable areas.
Florida also continues to see a big increase in population moving from other areas due to lower costs compared to other cities in the country.
6. Buyers have more control
During the red-hot housing market in 2022, there were stories of buyers having to get an offer accepted without ever looking at the home.
But buyers are starting to regain control of the process again, so things like sight-unseen offers may not be something you have to worry about in the cooler housing market.
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7. Rental prices are also cooling down
You may not be in the market to buy yet, but there’s some good news for renters as well.
February’s median rent price was at $1,937, which is only 1.7% higher than a year ago and the smallest increase in nearly two years.
Landlords are also dealing with an increase in vacancies, pushing the cost of rent lower in order to be competitive in the market.
8. Homeowners may decide to stay put
One way to increase inventory in the market is to increase the number of home sellers, but that may not be appealing to owners with rising interest rates.
More than 85% of owners have a mortgage rate below 6%, according to Redfin, making them less likely to put their homes on the market.
Owners who have to buy a home to replace the one they are selling are likely to balk at the higher rate and instead remain in their current living situation.
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9. Mortgage rates could still be volatile
Mortgage rates went up dramatically in 2022 before coming back down in the last two months of the year. But how long could that last?
Rates started the year at an average of 6.42% for a 30-year fixed-rate mortgage, according to the Federal Reserve, and reached a 2023 high of 6.73% in early March.
That mark is still below the 7.08% reached in November 2022, and rates aren’t going up or down as dramatically as they were in 2022.
Now may be a good time to sell your house if you want to retire early or perhaps you’re in the market for buying a home.
But keep track of these real estate trends if you’re hopeful or worried that they may affect your plans. You don’t want to put yourself in a position where you’ll have to find creative ways to pay your rent.
It’s also a good idea to create an estimated homeowner’s budget now to factor in costs you may incur such as utilities, property taxes, and other expenses to see if it’s a good time to buy or sell.
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This article 2023 Real Estate Trends: Read This Before You Decide to Buy or Sell originally appeared on FinanceBuzz.